In the central valley of California, where I live, probably half the population are immigrants and their children. The great majority of the immigrants are from Latin America. The schools here provide "free" breakfast and lunch to kids from "low income" families. In many areas, this means virtually 100% of the kids. The meals are provided all year around, including during summer vacation.

In addition to the free meals at school, most of the families whose kids qualify for those meals also receive food stamps and wic. So they are getting food aid from 3 sources, usually much more than they actually spend on food. There is a lively black market it goods purchased with the WIC coupons, and widespread fraud in the school lunch program. Nobody dares investigate this, for fear of being labeled "racist"

Statistics show that 57% of Mexican immigrants with children receive some form of welfare benefit. Yet, the left and the democrat party, are pushing for even MORE immigration of poor people from the 3rd world. The left wants their votes, and the corrupt business interests want more workers AND more customers.

Mass immigration needs to end. We need a smaller number of immigrants with skills to keep the high-tech economy rolling. Such insane programs as the "visa lottery" should be ended.

In the central valley they had to shift crops partly because those who could harvest the crop refused to cross the border one year and they lost the harvest. Long ago we should have used a worker permit system. Instead partly due to greed they preferred to let the farm workers cross into the US under terror tactics to keep them working poor under draconian conditions. Recently the immigration is balanced because of the poor US economy. The question is what to do with the 12 million who have been in the states for a lifetime. Too late to tell them to go home. The only increase in immigration in the bill passed by Democrats in the Senate are the highly skilled workers in high tech. I oppose that too.

Two mistakes:
Hawaii receives benefits of $60,590, not $49,175.
It was Idaho, not Mississippi that has the least welfare benefits.
Edit: Accidentally confused Idaho and Iowa, updated the above to put in the correct state.

The article states the tension between the need and the solutions clearly. What is missing is a real opportunity for individuals to obtain a job when they do decide to get off the couch and leave the soup lines. I propose shifting subsidies from welfare to employment...if a man works an 8 hour day, he will be too tired to commit crimes and mischief. Over a couple of generations, the work ethic and patterns of self support will have been restored to our society....the welfare supports can be withdrawn collectively on a gradual basis, and even the subsidies for employment. As the economy becomes productive, with every able body working, more money is flowing and folks realize the benefits of participating in an honest days work. Bring the jobs home from overseas....at all costs.

Just how do you propose to do that: bring back jobs? How do you propose to restore meaningful job opportunities to our citizens.

Until the problems of the economic privileges sold to the corporations is addressed, we can go nowhere.

Until our citizens realize there is a Privilege / Opportunity Equilibrium: that every time a politico creates an economic privilege there is a reduction in meaningful economic opportunities for the rests of the society, we cannot create meaningful opportunities for our citizens.

Haven't you and your commie friends realized that you cannot legislate outcomes, only opportunity. Throwing stones at the eeeevil rich that create jobs, spend money, and actually vote with you leftists doesn't help the poor. Democrat policies have destroyed the inner cities and created an entire class of people totally dependent on government support for life. The author's argument is to find a way that helps the poor have a better life, not government provided life.

Politicos (elected politicians). There is a Privilege / Opportunity Equilibrium. Every time a politico creates an economic privilege there is a reduction in meaningful economic opportunities for the rests of the society.

Because in these United States most of the activities of politicos and administrators in creating, selling and enforcing privileges we have gone from being known as the land of opportunity to the land of bought and sold privileges, and we lead the world in campaign contributions.

As a result we have destroyed the middle class and most meaningful economic opportunities of our children.

Privileges include the ability to incorporate a business, in such a way the executives are unaccountable to shareholders, and exemption from meaningful prosecution for financial crimes on Wall Street and in the world.

Citizens United allows opportunities to concentrate in the hands of the highly privileged without financial disclosure.

The P/O Equilibrium is discussed in Bartenders Guide to Politics (see bartendersguidetopolitics.com)

It is simple political science, and the solution is simple: ban the enforcement of economic privileges and politicos will have nothing to sell, and lobbyists will have nothing to buy.

The courts could do this if when entering the their chambers they leave politics at the doorstep and quit trying to equate money to (free) speech and trying to convince us that corporations are citizens.

In return for accepting welfare reform (I.e. time limits and work requirements) President Clinton demanded that Congress accept SCHIP (government backed health cover for millions of "children" many of whom are not children at all). When the growth of SCHIP is taken into account I am not sure that Welfare Reform, in the long run, really saved money. I just do not know.

Be that as it may, Welfare Reform has now been undermined by Barack Obama's Executive Orders. These Executive Orders are unconstitutional (the President is head of the Executive branch - he has no right to make or change legislation, which is the province of the Legislative branch)but, as with previous Presidents, the Supreme Court has proved a weak guardian of the Constitution. The failure to stop Obamacare (an obviously unconstitutional scheme that will finally crush the United States) raises the obvious question of why bother to have a Supreme Court at all?

President Barack Obama has undermined (violated) the law in many areas with his Executive Orders, but as this article is about welfare I at least expected some account of his Executive Order antics in this area in the article.

As for the general rise in dependence on government schemes (even the article admits that, for example, spending on Food Stamps has doubled under Obama) - this is a natural consequence of the Cloward and Piven ideology that Barack Obama was taught at Columbia in New York. Of course the Economist magazine knows this - but you (like the rest of the msm) have refused to report about it for the last five years.

The increase in dependency on government schemes (such as Food Stamps - which did not even exist in 1960) is not an accident, any more than Obamacare is an accident. It is part of a deliberate and calculated plan to "fundamentally transform" the United States - to kill off any remaining elements of the limited government Republic that it was once.

If you wish to reduce income inequality I suggest that the Federal Reserve (and its "cheap money" credit expansion) be abolished. It has been known since the time of Richard Cantillon (back in the 1700s - he was John Law's partner in "legal" crime)that credit-money expansion tends to favour mostly wealthy people at the expense of mostly poor people.

Sadly I do not expect the left to understand this. For example "Occupy" marched right past the home of George Soros (who benefits vastly by the credit-money subsidies on Wall Street) without shouting anything (almost as if they did not know where they were marching passed - or what Mr Soros does). But when they got right across town to the New York home of the Koch brothers (who make their money the old fashioned way, by productive industry rather than financial market manipulation) the shouting was intense.

If an individual has never been a productive member of society then why should there be an implied obligation on the part of those productive members to support that person indefinitely? It seems they only go on to produce even more unproductive members of society by having babies they could never afford to raise. The problem seems to be there are too many marginally productive members of society that are breeding even more unproductive members who competing for the same low level jobs only further driving down wages. The solution seems to be to reduce their numbers through birth control, reducing benefits and requiring government mandated work programs for any benefits received.

There are 32 people looking for that one job that is available. Would you hire the other two?

America has lost over 8 million jobs to the "Free" but unfair trade, and another 2 million jobs have been outsourced. then cam eh 'Almost financial market collapse" that cost the jobs of over 5 million.

Much of the criticism of welfare plans is that they reward people for not working. Well, why not just scrap all the welfare programs and have the government simply guarantee a job at a respectable wage for all citizens who present themselves to the employment office? There are an infinite number of problems in the world that need human labor to solve - the old to be comforted, the young to be taught, the environment to be protected, infrastructure to be maintained, new mothers to be aided, neighborhoods to be patrolled - that a government can easily find jobs for all applicants. This solves many problems:
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If people are truly gaming the system or lazy, they won't bother enrolling in these jobs.
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Governments will receive a real benefit as the citizens in the program perform useful work. Infrastructure will be better maintained and function more efficiently. All citizens will be better trained.
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Private sector businesses will benefit from an improved working environment created by the job guarantee workers as roads are more reliable, traffic flows better, streets are safer, &c.
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Recently unemployed workers will receive an income and the dignity that comes with regular work. They will receive on-the-job training that will make them more appealing for private-sector companies to hire.
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Job Guarantee workers will spend much of their salary and create demand for private sector goods and services, providing a boost to the economy.
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Job Guarantee workers are busy working and able to plan for the future. Employed workers with a steady income are less likely to abuse drugs and commit crimes, lessening the cost to governments to police and incarcerate their citizenry.
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What's not to like?
Thanks,
Joel

The jobs created would be politically driven, not economically driven, because the government serves political masters, not economic ones. You'd have a bunch of Obamas running around sucking up government wages, playing amateur golfer, while not producing anything particularly useful.

To describe living off of just over $700/month after rent with a newborn child in Boston as "comfortable" sets a very low bar for comfort. Sure, you won't starve to death, but it's a pretty meagre lifestyle. To argue that people would rather live this way rather than seek employment is actually an argument for how terribly low salaries are, rather than about the laziness of the "shiftless poor".

Guess what? The Cato Institute was created by the totalitarian capitalist Koch Brothers.

I am really surprised that the Economist would use such a subjective source as Cato.

I read an article of Cato on the poor and the author stated, "If people have appliances, they are not poor."

Most of the people on assistance are there because of things that they did not control. The poor are not the entity responsible for their economic position.

The traditional Republican party of America is dead. Those wear the Republican label now are totalitarian, corrupt and incompetent. They run for election on narrow minded ideologies to garner votes, and when they get into office they convert those narrow minded ideologies into policies that have proven to be wrong, but they still institute them and America is stuck with their miserable failures.

For a political party to be legitimate they have to have a positive record of political accomplishments.
Folks, no such record exists--therefore, they are illegitimate.

"I read an article of Cato on the poor and the author stated, "If people have appliances, they are not poor."

This depends on how you define poor. You can define poor based upon income equality which means you are now poor because my salary has increased while yours has not or you can define poor based upon standards of living. While it is true that more people are falling below the line because a smaller number are getting wealthier faster it is also true that the poor today have a much improved standard of living than the poor of yesterday. The poor today don't have more disposable cash necessarily but today they can get free smart phones, transportation, housing assistance, food, cable, internet, & health care when in past years many of those conveniences were not available.

"Most of the people on assistance are there because of things that they did not control. The poor are not the entity responsible for their economic position"

I am not sure this is an entirely true statement...I am sure it's true for some people but its also true that many are poor because of bad choices or lack of drive/desire to improve their circumstances.

You are quite correct, both parties are driven by lust for campaign contributions and sell political privileges for monetary contributions.

By selling political opportunities to the big bidders (corporations) there are fewer meaningful opportunities left for the common citizen.

The Privilege/Opportunity Equilibrium is discussed in Bartenders Guide to Politics (see bartendersguidetopolitics.com)

Most citizens would happily work if that effort led to a more satisfying life, but the privileged would prefer to keep them "at a low level of intelligence and eduction, foment dissention among them, and even prevent them from being too well off, lest they wax fat and kick" (JS Mill Representative Government Ch 6)

You are quite correct, both parties are driven by lust for campaign contributions and sell political privileges for monetary contributions.

By selling political opportunities to the big bidders (corporations) there are fewer meaningful opportunities left for the common citizen.

The Privilege/Opportunity Equilibrium is discussed in Bartenders Guide to Politics (see bartendersguidetopolitics.com)

Most citizens would happily work if that effort led to a more satisfying life, but the privileged would prefer to keep them "at a low level of intelligence and eduction, foment dissention among them, and even prevent them from being too well off, lest they wax fat and kick" (JS Mill Representative Government Ch 6)

You are quite correct, both parties are driven by lust for campaign contributions and sell political privileges for monetary contributions.

By selling political opportunities to the big bidders (corporations) there are fewer meaningful opportunities left for the common citizen.

The Privilege/Opportunity Equilibrium is discussed in Bartenders Guide to Politics (see bartendersguidetopolitics.com)

Most citizens would happily work if that effort led to a more satisfying life, but the privileged would prefer to keep them "at a low level of intelligence and eduction, foment dissention among them, and even prevent them from being too well off, lest they wax fat and kick" (JS Mill Representative Government Ch 6)

"Most of the people on assistance are there because of things that they did not control. The poor are not the entity responsible for their economic position."

I think as mature adults we have all met people throughout our lives who chose to screw off rather than do what they're supposed to be doing. The schools wouldn't be so screwed up if what you are saying is true.

A good study is a good study, irrespective of the source. If the cato paper has stated and well documented assumptions, a strong information gathering process (no sampling bias), and a decent research methodology (subjective to TE's analysis), why should it matter the source? I gain from the reading of well developed studies by groups that I disagree with. Should I refuse to do so?- as you are implying should be done here with Cato.

In what possible sense can the cessation of transfer payments be counted as an increase in the marginal tax rate? Since I never received those benefits in the first place, does that mean my marginal tax rate is also in the 80-90% range, or doesn't that count?

This is breathtakingly dishonest argument. A tax is a tax. A handout is a handout. Not getting a handout does not turn it into a tax.

This being the USA, I can't help but feel that politicians (Republicans, by and large) will opt for a simple solution "reduce welfare payments" rather than addressing the core issue of making the system less complex and more rational. This is the land of the quick-fix ("for every complex problem there's a solution that is simple, elegant, and wrong.").

As someone who is typically more conservative in nature I would agree with your statement. Why can't we make the system less complex rather than reduce payments? I remember reading somewhere (and I cant remember where so don't ask me to substantiate it) that the federal bureaucracy consumes nearly 70% of the money we allocate to help those in need meaning only 30% of our tax dollars used for that purpose actually reach those we intend to help. IF that is even close to being true that is a horrid efficiency rate. Even if we pretend that it is closer to 50% we could still probably save a tremendous amount of taxpayer money without reducing a single payment to those in need.

Let me add another complication to the issue. There is an underground economy that runs on cash and allows those on welfare to engage in paid work off the books. Such untaxed compensation while on welfare beats the alternatives of welfare without work and work without welfare.

I really enjoy reading articles out of the Economist. These are the conversations I would enjoy having with normal people, unfortunately it does not happen enough, if at all. With each issue I become a different person, Im becoming part of a select group of readers. Oh, to know what the future will bring.....
A small amount of financial literacy goes great distances. I feel very good knowing how to read an article about topics like this and beyond. Many articles are scary and mind blowing. All the Negative Nancy's out there, read another article and comment less.
33 year old man child, unemployed, holding a college degree
American Citizen
probably just a lazy person in the eyes of many.
I applied for unemployment, got rejected.
Family, the First Welfare
Thanks Mom, Thanks Dad
(shout out to "Bye, Bye, Boomerang" Aug. 17, 2013)

"In 39 states, their hypothetical single mother would make more from benefits than a secretary does from work."
That's only because the secretary is woefully underpaid-- after all, that's "woman's work", and therefor less valuable to the men who control who gets paid what.

I guarantee you she does more than that. You're just too ignorant and stuck in your own life to notice.

Regardless, if you think she was only hired for her looks, then you should fire the one who hired her rather than take it out on her. Can hardly blame someone for trying to find a good paying job. You CAN, however, blame someone for abusing their position.

The value of jobs has little to do with the value of the work performed, and everything to do with the value of what those in charge are willing to pay.
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An engineer could produce a spectacular new piece of equipment, and the marketing manager could turn it in to a wildly successful product, but more likely than not, neither of them are going to see much of the benefits from it.
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Instead, that will go to the shareholders, who did nothing, or hte executive officers, who did little and claimed credit for everything (then avoid claiming credit when bad things happen).

I suggest a basic course in economics. First off, your counterfactual is nonsensical. They do get rewarded for their work, it’s called a wage. If the engineer could develop such a wonderful piece of work, he should go into business for himself. That he lets others bear the risk, aka shareholders, it reduces the benefits he would hypothetically receive. Second, if someone doesn’t produce value that exceeds their salary, this is an uneconomical job and should be eliminated. It destroys capital and impoverishes us all.

You beat me to it! Exactly the point I was going to make. The "hypothetical single mother" living high off the hog on welfare checks, making as much as the secretary! This is the classic conservative line, nevermind that the reason the secretary is making so little is 30+ years of stagnant or declining real wages due to the systematic destruction of labor in favor of privatization, deregulation, "globalization", etc.

If our new middle class is right at the poverty line, then goddamnit the poor better be eating out of trash cans!

I have often wondered why people make this argument until I realized that it is most often a case of envy rather than fact. I don't know of very many people who risk everything to create a business for the purpose of enriching others. People go into business to create their own slice of pie and generally pay others what others are willing to work for. If no one is willing to work for what they are offering then they will have to up their offer or have no employees. If you want to give up that low paying secretary position then start your own business. Anyone can do it with the amount of small business assistance available today and by the way if that secretary happens to be a woman then she qualifies for FBE status making it even easier. But the problem is it takes hard work and guts to carry your own water and have to possibly forgo a regular paycheck.

My wife is a secretary for our local school district. She doesn't make a lot of money and since she is a government employee it isn't because some greedy corporate "man" dictates what she can get paid...the taxpayers do.

I can also tell you with great certainty that she likes her job and doesn't feel woefully underpaid. Sure she used to make 3 times more in her previous life as a human resources manager for a large hotel chain but her job now provides little stress, she gets to interact with kids all day (its the parents she's not so fond of), and she can go home at the end of the day and not think about work one iota. I chalk it up to cancer changing your perspective on what you thought was important in life.

In fact, I am starting to believe (after staying up until 2am trying to meet a deadline for a client in a business I am trying to get off the ground) that she is the smarter of the two of us.

Henry Clay's attributed stance that a man is entitled to the fruits of his labour has a corollary. That a man should be able to fail, start again, and pick himself up again economically. This truth has not been true for a long, long time in modern America. The sclerotic arteries of the real economy remind one of those in the late Soviet Union: we pretend to work and they pretend to pay us. And a privileged, relatively few parasites reap the benefits of the current arrangement with their country dachas in Jackson Hole, WY.

Health Care in America mainly benefits those in the Medical/Pharmaceutical complex. The citizens of the US spend 17.8% of the GDP on health care and get less for it compared to the OECD countries that spend approximately 10% of their GDP on health care.

Every year doctors over patients over $700 Billion for unnecessary tests and procedures. Then you add what hospital overcharge, and nursing homes, and medical equipment manufacturers.
We pay more for pharmaceutical drugs that most other countries do.

While the writer of the article acknowledges that most of the world has working and affordable healthcare systems, he denigrates them with the needless comment "imperfect".
Compared to America's unnecessarily complicated and expensive healthcare shemozzle most others arond the globe are superb systems.

Quite rightly, you have observed that there is everything but competition in healthcare, now to be known as Obamacare. There is nothing to restrain prices and but regulators controlled by privilege selling politicos. There is nothing to encourage innovation either.

Our politicos have made promises that no economy can afford to support.

Quite rightly, you have observed that there is everything but competition in healthcare, now to be known as Obamacare. There is nothing to restrain prices and but regulators controlled by privilege selling politicos. There is nothing to encourage innovation either.

Our politicos have made promises that no economy can afford to support.

It was only 20 years ago that Republicans, while demonizing the dependent poor, supported programs such as food stamps, Medicaid and the EITC that helped the working poor. Now they are demonizing the working poor.

The Economist failed to note the main reason for the shift. A huge share of the working population that would have been in the middle class 20 years ago is now working poor, and thus eligible for the programs. That's why their cost is increasing.

As for disability, on the margin it is an economic problem as much as a physical one. Employers will put up with those with moderate physical and mental limitations when there is a labor shortage. Not so when healthy young college graduates are available to work as "interns" for free or "independent contractors" for less than the minimum wage.

If it is your point of view that the problem is most Americans had it too good, relative to those at the top, in the past, doesn't this count as a free market success? They've been put in their place in the labor market, and now only need to be cut down to size in the government.

But now that the success is going to be achieved, it is up to businesses, not the government, to answer this question. Who are you going to sell to? And to Paul Ryan I ask this -- who are they going to sell to if the government cuts off money to the working poor?

Nope. Value in exchange dictates production. If my trading counterparty lives off products i produce without generating anything of value, it is rational for me to stop producing and join them on welfare. Let somebody else work. Or, if i'm already rich, it causes me to stop taking risk and investing. I'd rather drink martnis on the beach. That's the structural problem we currently have.

Maybe you live in India, Bangladesh or China. Obviously you have not been on a shop floor in any 1st world country.

You get what you pay for. If you treat your employees like crap, that is what you will get. Empower them and treat them with respect and pay them a decent wage that reflects the profits you are making off their backs (rather than giving it to the executives and shareholders) and you will get a bigger bang for your buck.

In what rational world does an executive deserve compensation 200+ times more than the average employee.

Maybe you live in India, Bangladesh or China. Obviously you have not been on a shop floor in any 1st world country.

You get what you pay for. If you treat your employees like crap, that is what you will get. Empower them and treat them with respect and pay them a decent wage that reflects the profits you are making off their backs (rather than giving it to the executives and shareholders) and you will get a bigger bang for your buck.

In what rational world does an executive deserve compensation 200+ times more than the average employee.

"In what rational world does an executive deserve compensation 200+ times more than the average employee"

Based upon my limited (and probably flawed) knowledge of business that executive is worth 200 times more than the average employee when he/she can manage, leverage, and grow a company of thousands of those average employees providing more company growth, better products and even more employment opportunities for even more average employees and does it in a way that most of those average employees cannot.

Honestly do you not believe that Bill Gates is worth his ridiculous fortune when the company he built and the companies that feed off of the company that he built provide gainful employment for millions upon millions of people?

For most people this is ideological. For example tax fraud costs taxpayers much more than welfare fraud and out of welfare fraud the greatest cost is with those who are already well off rather than poor single mothers. Even welfare without fraud is a drop in the ocean compared to where the welfare costs really lie (pensions and medical).
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In other words right w(h)ingers who bang on about food stamps are looking in the wrong place. If they really wanted to save money then there are far better places to look and if they want to encourage people to work then there are far better solutions such as the ones suggested in this article.

The problem in these United States is simple, and it is a political creation. Politicos create, sell and enforce economic privileges.
The problem with a privilege is that there is a Privilege/Opportunity Equilibrium : each time you create a privilege, you diminish the opportunities of \the rest of the citizens. We used to be known as of opportunity. We now lead the world in campaign contributions, a true measure of bribery or corruption.
Corporations are the big bidders in the buying of privileges. "Father, if only they knew how much we spend to keep them in poverty". What fools these mortals be.